Zaccaria Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.

Required:
a. What is the contribution margin ratio?
b. If sales increase to 5,040 units, what would be the estimated increase in net operating income?
c. If the selling price increases by $4 per unit and the sales volume decreases by 400 units, what would be the estimated net operating income?
d. What is the break-even point in unit sales?
e. What is the margin of safety in dollars?
f. What is the degree of operating leverage?

Question

Zaccaria Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.
  
Required:
a. What is the contribution margin ratio?
b. If sales increase to 5,040 units, what would be the estimated increase in net operating income?
c. If the selling price increases by $4 per unit and the sales volume decreases by 400 units, what would be the estimated net operating income?
d. What is the break-even point in unit sales?
e. What is the margin of safety in dollars?
f. What is the degree of operating leverage?

Quizplus · Accepted Answer

The Answer of Zaccaria Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.
  
Required:
a. What is the contribution margin ratio?
b. If sales increase to 5,040 units, what would be the estimated increase in net operating income?
c. If the selling price increases by $4 per unit and the sales volume decreases by 400 units, what would be the estimated net operating income?
d. What is the break-even point in unit sales?
e. What is the margin of safety in dollars?
f. What is the degree of operating leverage?

Zaccaria Corporation Has Provided the Following Contribution Format Income Statement